What is the value of the OTA (Online Travel Agency) customer?
According to a new study from Oxford Economics and Expedia, loyalty marketers should take sharp notice of the OTA customer. The study analyzed nearly 100,000 trips taken by U.S. households in 2016, segmented into “OTA guests” and “non-OTA guests.”
“The key takeaway from the study is the value of the OTA customer, or the ‘OTA Premium’—who was found to spend more on average per trip than the non-OTA guest,” Abhjit Pal, Head of Research for Expedia, explained to Loyalty360. “The spending differential is evident across most travel-related categories, including food and beverage, retail, recreation and entertainment, and transportation. The largest spend difference is in the retail category, where the OTA traveler spends nearly 26 percent, followed by transportation and recreation and entertainment, both upward of 20 percent.”
Officials at Oxford Economics coined the term “OTA Premium,” which shows a variance between OTA guest and non-OTA guest spending across all categories.
The OTA Premium is partially attributable to the typically longer length of stay for OTA bookers, and does not have any correlation to travel party size. What’s more, the study reveals that OTA bookers generally are slightly younger than non-OTA bookers, with a higher concentration in the 25-54 age group, by nearly 10 percentage points, with no notable variant from household income.
“The study underscores that Expedia consumers are of high value to the travel industry, a point that has been widely debated,” Pal explained. “OTAs not only drive incremental guests, but high value guests who add value to almost every aspect of the travel ecosystem for a destination.”
Pal said that loyalty marketers across travel segments, including retail, transportation, food and beverage, and entertainment, can use these insights to market to and attract this highly valuable customer demographic during various touch points throughout the travel journey.
“For hotel loyalty marketers, specifically, leverage pre-arrival and on-property communication channels with OTA bookers to offer promotions for any on-site offerings and services,” Pal said. “The study analyzed nearly 100,000 trips and the spending habits of travelers by booking type, and the data revealed that OTAs bring a larger traveler spend to every facet of a trip, regardless of trip purpose. This underscores that OTAs are an important contributor to the travel ecosystem, which provides an opportunity for the travel industry to embrace this valuable consumer segment.”
Why are OTAs more engaging to consumers?
“More than one-fifth of travelers use an OTA to book all or part of their trip and OTAs provide consumers with an easy and seamless way to explore, discover, and book travel from one site or mobile platform,” Pal added. “The ability to book hotel, air, car on one easy-to-use site—as well as explore a variety of pricing options—provides today’s discerning consumer, who is used to comparison shopping, the convenience they crave.”